From Shays’s Rebellion to Syntagma Square

Riot Police in Syntagma Square

The Occupy Wall Street movement raised the issue of private debt in public discourse. Far from being merely an problem of individual profligacy or moral failing, it is a structural problem of neoliberal financialization. And far from being merely an ‘economic’ problem, it is clearly a political problem that is intrinsically linked to the institutionalization of the oligarchic power of finance capital. While often being overlooked, the relationship between debt and politics – both in the form of struggles against debt and the effects these struggles have on elite driven processes of state formation and democratization – is one that is intrinsic to the Western political experience. After all, the birth of Athenian democracy resulted from the struggles by impoverished peasants against the brutalities of debt bondage.

The character of American ‘federalism’ was shaped by the struggles over debt and property in the late eighteenth century. Looking back today, we often assume that federalism – the union of states under a ‘federal’ legislative, judicial and executive power – to have been an inevitable development of ‘modern’ state formation. Or at the very least, federalism is presented as the most viable arrangement to meet the security needs of the individual states. But this is only part of the story; after all, the founders had a much broader notion of ‘security’ than we have today. The security of property played just as important a role in the contours of American federalism as did the securing of America’s borders from external threats.

In September 1786, a group of indebted farmers, under the leadership of Daniel Shays, a former captain of the continental army, staged a short lived military insurrection against the state government of Massachusetts. Their debts were incurred in the course of fighting for the cause of independence against the British. As is always the case, the costs of fighting the war were downloaded onto the lower classes. To add insult to injury, the state legislature refused to issue paper money in order to alleviate the indebtedness of the farmers and veterans. Shays and his followers attacked the local courts in defiance their rulings in favour or repossession.

All of this occurred in the context of the process of creating and ratifying a new constitution to replace the existing Articles of Confederation. While Jefferson shrugged off the episode as a necessary incident of a free people, stating that ‘No country should be so long without one [a rebellion]’, Hamilton took it as a more serious sign of the potential threat to a political order dominated by a mercantile-landowning oligarchy. Hamilton had this to day about the uprising:

Let the point of extreme depression to which our national dignity and credit have sunk -let the inconveniences felt every where from a lax and ill administration of government – let the revolt of a part of the State of North-Carolina – the late menacing disturbances in Pennsylvania and the actual insurrections and rebellions in Massachusetts declare! (Federalist 7)
And again:
The tempestuous situation, from which Massachusetts has scarcely emerged [i.e., Shays’s Rebellion], evinces that dangers of this kind are not merely speculative. Who can determine what might have been the issue of her late convulsions, if the mal-contents had been headed by a Caesar or by a Cromwell? (Federalist 21)
 
For Hamilton, therefore, Shays’s Rebellion demonstrated ‘how little the rights of a feeble government are likely to be respected, even by its own constituents (Federalist 26).’ But Shays’s Rebellion was not an isolated incident. During the same period, groups in North Carolina and Pennsylvania attempted to secede from the union. Demands for secession were bound up with similar issues related to indebtedness as those which inspired the rebellion in Massachusetts (as opposed to later issues related to secession in the mid-nineteenth century). Pennsylvania, on the ‘apprehension of commotions among a part of her citizens, has thought proper to have recourse to the same measure’ – that is, raising a militia to quell internal dissent against indebtedness and oligarchy (Federalist 28). Pennsylvania was home to some of the more radical plebeian movements in American post-colonial history, and there was an initial attempt to relieve the plight of the indebted by either postponing debt repayment or issuing paper money as public credit to pay back creditors.
In the context of struggles against debt, numerous debtors also engaged in squatting on vacant land in the Western peripheries of their states. Although vacant, these lands were often the private property of mercantile interests (after having either pushed First Nations peoples further West or exterminated them); the proliferation of squatting by debtors further highlighted the capacity of the states to enforce the rights of property. This has been recently discussed in Charles Post’s book, The American Road to Capitalism (Brill 2011). In the end, challenges to elite power from below provoked the upward concentration of power in the form of the new American constitution vigorously promoted and defended by the likes of Hamilton.
Similarly, the movement towards a ‘United States of Europe’ has been given greater impetus in the context of the current Eurozone Crisis. While predating the present crisis, this movement experienced some significant setbacks when  French and Dutch voters rejected the attempt to create a European Constitution back in 2005. The successor Lisbon Treaty was nixed by the Irish in 2007 (eventually having to ratify under conditions of economic crisis in 2008). The transformation of the crisis of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) into a full blown crisis of the Eurozone has done two things. First, it has demonstrated the institutional weakness of the European Union in imposing discipline on its member states necessary for maintaining the currency union. Secondly, it has provided a context of fear, crisias and anxiety that has allowed Eurocrats to more vigorously push forward the project of creating a political union. The idea of a ‘fiscal union’ is designed to impose uniformity on fiscal policy in order to ensure the uniform pursuit of austerity across the Eurozone. Since the financial crisis has been transformed into a public debt crisis, the need for states to enforce austerity in order to transfer public resources to private coffers has increased, particularly in the context of widespread popular upheaval in Southern Europe.A common theme running throughout the politics of the Eurozone crisis is the subordination of democratic process to the technocratic management of economic elites firmly committed to the doctrines of neo-liberal economics. In each context, crisis ‘management’ necessitates the restriction of democratic debate over policy choices and the circumvention of democratic processes. In the eyes of EU technocrats, the democratic process is not only unnecessary, it is a nuisance. Referring to the ‘mandate’ of the collapsed Socialist government of Portugal to commit to the Troika conditions for a bail-out, European Commission spokesman Amadeu Altafaj had this to say:

‘Democratic legitimacy? It’s not necessary. Apparently they had some mandate when they made the request [for a bail-out]. So if they were empowered … to make the request, they are empowered to progress with negotiations,’ said of concerns that a caretaker government could not sign on to a bail-out package on the scale of those imposed on Greece and Ireland. ‘They simply cannot wait.’

Indeed, if neo-liberal technocrats have ‘learned’ anything from the crisis, it is not the inherent failure of their neo-liberal model, but rather, the obstacles that the democratic process puts in the way of the resolution of economic crisis in favour of capital. In essence, the problem is too much democracy:  the plan now is to integrate the Stability and Growth Pact and the European Stability Mechanism into one system of governance that ‘would enable the Commission or Council to intervene in the preparation of national budgets and monitor their execution.’ In the wake of the European Council meeting of 23 October 2011, the European Commission elevated the office of Commissioner for Economic and Monetary Affairs to the position of Vice-President of the European Commission and granted the office extended powers of ‘economic surveillance and governance’. According to European Commission President José Barroso, the purpose of these institutional reforms is to strengthen ‘the Commission’s role in assessing, monitoring and coordinating national economic policies and budgets.’ The crisis of neo-liberalism in the Eurozone is thus provoking the further upward centralization of executive power at the European level, in the interests of maintaining neoliberal discipline.

None of this, however, should come as a surprise. Only those who believe in the ideological rhetoric of the New Right, or those who are beholden to pluralism—which maintains a relatively equal distribution of power in society that precludes dominance of a ‘ruling class’—or to varieties of institutionalism—that emphasise the autonomous nature of state capacities vis-a-vis entrenched economic elites—would be taken aback by these developments. The foreclosure of democratic process is not only compatible with the day-to-day practices of neo-liberal politics; it is intrinsic to the principles of neo-liberal political thought. While the neo-liberal era pays lip-service to the rhetoric of democracy, and neo-conservative defenders of neo-liberal policies wrap their reforms in the cloak of populism, neo-liberalism has always had an ambiguous relationship to democracy. As the current round of austerity measures demonstrates, the process of neo-liberal crisis management is one of elite accommodation – behind a parliamentary façade – that relies increasingly on an executive power that is unresponsive to the demands of the electorate.

The example of Shays’s Rebellion provides us with an important precedent. In the context of threats – from below – to powerful propertied interests, power is further concentrated and shifted up the political hierarchy to ensure that the popular classes will be less able to affect the contours of political and economic development. An important aspect of this history is that it gives us an understanding for the growth of the executive and coercive capacities of the modern state. New Right and libertarian narratives are inclined to associate the growth of the state with the development of social welfare programs and explain further state expansion to the growth of a sense of ‘entitlement’ amongst what Hayek called the ‘sinister interests’ of ‘unlimited democracy’.

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